How digital data has birthed problematic loans

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He had paid almost everything. After months of dawn-to-midnight riding, the boda boda rider was within a few instalments of finally owning his motorcycle, but the asset meant to lift his family out of poverty vanished in a flash.

That is the story of many riders. It’s either that the bike vanished, was repossessed, or was stolen when they were at the tail end of clearing their obligation to the financiers. One wonders: are the financiers running rogue departments to perpetrate the acts? Or is it their employees who work in cahoots with rogue mafias in the industry to kill dreams?

Let me say what polite finance avoids: alongside the genuine digital revolution, a darker industry has grown, an outfit that dresses in the language of fintech but behaves like loan sharks with a download button. “Loans from hell”.

They lend with a smile and collect with a knife. It wears two faces. The first is the instant-cash app: interest that looks tame on screen but compounds past 100 per cent a year; charges buried in midnight fine print; and when you stumble, your own phonebook turns into a weapon, your shame mailed to your mother, your pastor, and your boss.

The Competition Authority has even flagged lenders demanding repayment in US dollars, as though a Nairobi hustler had borrowed on Wall Street.

The second face is asset finance: the “buy now, pay later” bikes and cars. Here, the harm cuts deeper because it preys on dreams.

Unfair practices

The financiers say they have put hundreds of thousands of Kenyans on the road, and that is fairly acknowledged; they deny unfair practices. Yet Parliament has summoned the likes of Watu Credit, Mogo, JoyInc, 15 Minutes, and My Boda, over riders whose bikes were repossessed just as they neared the finish line.

But as usual, our parliamentary committees are the best in PR with no outcomes. The same script played out in ride-hailing: drivers borrowed Uber- and Bolt-compliant cars through bank and fintech schemes, the platforms then flooded the roads and resulted in cut fares, and the auction yards filled with repossessed taxis.

This alone cost many, many depressed people, and many lost their families and livelihoods, and some even took their lives. The pattern is identical, whether the loan is Sh2,000 or Sh2 million.

The borrower carries all the risk; the lender keeps the asset, the data, and the upper hand. Here is the cruel irony: the very real-time data that should liberate the underbanked is being used to trap them. Used well, your digital footprint earns you credit once denied. Used by a predator, it becomes a leash, a tracker, and a repossession order.

The law is finally moving. The Central Bank of Kenya’s (CBK) 2022 rules forbid threats, abuse, and raiding a borrower’s contacts; the Data Protection Commissioner has fined lenders for leaking borrowers’ information, and the Competition Authority continues to flag them.

From 2025, the Treasury added criminal liability, with the power to bar directors and name offenders publicly, and unlicensed lenders cannot enforce a single shilling.

- The writer is the founder and CEO of Marathon Debt Recovery Ltd and a Certified Public Accountant